There’s one question that I’ve been seeing over and over for the last several weeks as the price of gold has taken out its all-time highs and continued a nearly uninterrupted ascent: Should I buy gold now?

It’s understandable, especially for people who don’t own precious metals yet. Nobody wants to be the sucker who buys gold at the top, only to watch it crater back to $1200 or below. But here’s some food for thought–

The US dollar is shattering historic lows against currencies like the Swiss franc, Australian dollar, and Singapore dollar. Any currency that isn’t a complete disaster is now being viewed as a safe haven. And the mainstream world is now, finally, waking up to the reality that the United States might actually default.

Never mind that the government has been insolvent for years and the evidence of such has been widely available to anyone willing to look at basic facts. Literally, only in the last week have people finally began to consider the possibility of a US default.

Here in Europe, the situation is arguably even worse. No one is being shy about a default in Greece– it’s discussed openly now by policymakers, and major financial institutions are preparing for a restructuring. And with its public debt more than 120% of GDP, Italy will not be far behind.

Governments no longer have the benefit of operating behind a curtain; their financial imprudence and technical insolvencies are now under the spotlight for all to see… and confidence is fading quickly.

The more people lose confidence in the dollar and euro, the more they look for alternatives. Large institutions and money mangers collectively control trillions of dollars within the financial system. Unallocated capital– funds held as cash and not being actively invested at the moment– must be held somehow, somewhere.

This is the chief reason why so many smaller currencies are surging. Compared to the dollar and euro, the Swiss franc looks incredibly safe, and money managers have a much higher degree of confidence that their Swiss bonds will be repaid than they have in the US or eurozone.

The more capital flows into these smaller currencies, the more they’ll appreciate against the dollar and euro. It’s simple matter of supply and demand– increased demand for the Swiss franc coupled with excess supply of US dollars means a stronger franc in US dollar terms.

Ultimately, this is the primary reason for gold to go higher in the long term.

Large financial institutions are increasingly looking at gold as a safe haven; it’s becoming less of a speculation and more of a store of value… and unlike most of the other available asset classes, precious metals are not politically sensitive.

Even stronger currencies like the Swiss franc have limits to their appreciation. At some point, the Swiss National Bank will impose capital controls to thwart the rise of its currency. Oil and agricultural commodity prices will likely be regulated and speculation outlawed if prices become too high.

But if gold goes to $2,000… $3,000… it may be an embarrassment to central banks, but it won’t become a populist issue. You won’t see any Tunisian merchants setting themselves ablaze because the price of gold is too high… and not too many politicians looking to fix the price.

Even if they do try to regulate gold prices or even make it illegal, you can be sure that the gold trade will continue to thrive in the rest of the world– especially in Asia and the Middle East.

So instead of worrying about buying gold at its all time high, ask yourself another question instead: Over the next few years, do you expect that these broken, bankrupt governments will inspire confidence among institutional investors, or do you think that confidence will continue to erode?

If you’re leaning towards the latter, you can be sure that more money will flow into gold, and that prices will rise.

Yes, there will be price fluctuations. Whenever the US government announces that it has finally reached a debt deal, there will probably be a correction. Given what’s coming in the next several months and years– debt downgrades, more budget battles, government shutdowns, asset seizures, etc., any correction will be a small blip along a long-term rising trend line.

And in case you’re still worried that you’d be a sucker to buy gold at $1600, consider that, if you don’t, in three years you’ll probably feel like a sucker for not buying gold at $1600 when you still had the chance.

It need not be difficult. Sell a third when it goes into overbought territory. Buy a third when it falls into oversold territory.

If you hold none currently, but your first third now, if it falls much more, add your second third. If it falls even more than that, add your last third and then refer to the above. When you are all in, your pm holdings should be 10-30% of you porfolio, depending on your stomach and vision of the future.

When people start to reject dollars en mass, Ole ink jet Bennie will screaming, red faced and wild eyed "GOLD IS NOT MONEY!!", while screwing himself into the floor boards, like a twisted Rumpelstiltskin.

Exactly. I've been buying silver for over a year now thanks to reading ZH. Since then, the GSR has steadily decreased until the margin hikes. When silver closed around $49 that one weekend, the GSR was around 36:1, so I went into my local coin shop and traded 36 eagles per one gold eagle. After the margin hikes I traded two gold eagles for 44 silver eagles EACH.

To be clear, I converted 72 silver eagles into 88 silver eagles within the span of three weeks. The only cost was fuel(neglibile since the coin shop is 8 miles away), and $100($50 flat "swap" fee each time because he always rounds the GSR down).

I like to describe playing the GSR like this: there's heavy traffic on the highway, 2 lanes each way; sure you can stay in one lane and still get there, but most often you'll get there quicker if you know when to change lanes.

The REAL QUESTION IS exactly who will you "sell" your worthless DEBT BACKED FRN's to?? The gold i TRADED for my worthless frn's, will be integrated into what ever the next fiat cycle is, if that should happen. So, tell me again how debt is wealth?

I realize this is hard to understand from your perspective, but, wish and try as you might, no one can stop this, we were warned, and chose to disregard the warning. Fortunately, this will bury the Keynesian theory, hopefully forever. We are now in catch 22, there is one more step to go, it is important to understand that any step taken will not reverse the course under any circumstances. That realization is forthcoming.

I bought in big right after the tech bubble when it was around 320/oz. I was called insane for buying it - my broker friends literally turned on me like rapid dogs. But the tech bubble made me realize that there were no more adults in the room running things. I also bought more at 1K as I realized we really were on a runaway train with a conductor (the bernanke) as high as a kite on ketamine, crack and LSD.

Now, if I didn't already own some I would say, buy it at the dips.

DIPS = each time the Govt lies and says they have a plan that will work.

It happens every few months. Then gold drops for a bit on the lie - then a few weeks later the lie is exposed and gold goes back up. There is no easy fix anymore, so you know when they talk about one that they are lying. Simple. A real fix will be something that will scare the crap out of the American populace as well as the rest of the world.

Gold will only fall back if there is a full acceptance of a (reasonable) austerity plan. You will know it is a real plan because it will scare the crap out of Krugman, Lies-man, et al. Ultimately, with the players in office now, I doubt we'll see that effective plan (both scary and effective) until it is far too late.

Also I think in the end they'll have to print their way out of this as deflation is not an option to them. Plus I have history on my side. Only Volcker had the balls to act in a responsible way, and that was a fluke - the best futures indicator is that Obama showed Volcker the door in January.

+++++++++++++++ for great taste in old flicks and being a gold bug! next thing ya know you will tell me you believe in the Holy Bible and the Constitution of the United States! at which point the FBI will Flag You for being a Home Grown Terrorist. But I will dig you! and so will your other Brothers and Sisters here! who knew there were chicks with brains out there? news to me, it was.

The gold is cheap -- I fully agree. And $1600 is nothing compared to what is around the bend.

The I am Chumbawanba bit means you are an idiot. Listen Chumba, we went over this before, drop that nonsense you baffoon. Have you gotten busted for drinking and driving since your last episode about a month back?

If I were us....I'd stop thinking about PMs in terms of dollars at all. When the dollar goes to 0, PMs go to infinity. They'll be "worth" whatever they'll buy at the local farmers' mkt or barter site. They'll be worth...your Life.

I just found this out: from januari 2012 it's not going to be cheap anymore. Excuse me please if this is old news, I don't believe I've seen it before.

Hidden in a healthcare bill there is supposedly a tax on gold coins and bullion effective januari 2012.Not that it matters much for us, most of the folks here either have enough gold, or are planning to buy asap.

the populace however... is going to be fleeced. very weird that constitutional money (gold) is going to be taxed...

It's this kind of thinking that is the problem if you ask me (I know no one did.)

Dollar cost average your acquisitions of both gold/silver. Waiting for the top/bottom is, in my opinion, very dangerous right now. At any moment something could cause even more economic collapse and currency devaluation. There is a possibility of "default" and if something like this were to send gold/silver in the $1700/$50 range then it will be difficult to say if that's the top, or if it will keep going. You run the risk of waiting for a correction that, since silver's been consolidating for months now, might never come. I bought silver @$12, $17, $28, $34 and now I bought more at $40/oz. I didn't want to buy it, but I dollar cost average my acquisitions and don't le the price in terms of dollars bother me.

If you're buying gold/silver at the "bottom" because you're planning on getting a higher return then good for you, that's a dangerous game that most lose. From experience setting a bi-weekly date, or a monthly date is best. I understand the debt ceilling talks/etc but if as I want to point out you're buying this for a quick gain or quick return you're doing this for the wrong reasons. Your investment time-frame for precious metals should be in the decade range. Not the week or month range. With this mentality, it's a screaming buy @$1600 and even more so since it has broken that ceiling it's already hit $1625. Who's to say it doesn't scream past $1700?

People and the markets are generally pissed off and tired of this bullshit government/debt ceiling/printing money/recession/depression talks. You have surging demand from central banks for the first time, you have a monetary metal that's also industrious and more rare than gold some say.

Don't ask yourself if you're buying at the top -- Ask yourself why you're buying and buy for that reason. Ignore the dollar amount because I am nearly certain 12 months after you purchased it, you will be in the black on your investment. I bought silver in november of 2010 when people were calling the "top" for silver at $30/oz. I dollar cost averaged and got it on a dip to $28 or so. This turned out in my favor, but now looking back, I've made about $12 off of every ounce I bought. I don't measure my gains in US dollars though... I look at overall purchasing power.

Oh yeah and there's that whole "price suppression" thing we've got going on. Throw in the ratchet effect the Fed's dealing with and I'd say you have some pretty good reasons to buy as much as you can at whatever price... and that whole HKMEx coming online and possibly printing a much different free market price for gold and silver... Keep in mind the price you're paying right now is already artificial in nature. If they lost the grip (not saying this is going to happen tomorrow) tomorrow for example, I don't think it would go to $1700. I think it would go much, much higher.

Just my two cents and how I've learned to let the price move where it will while I build up my physical savings account.

My plan is even simpler, when I have some fiats come my way, I just and buy. I look at the price, sure, but it does not influence my purchase decision. I never try to time my purchases (no BTFD), instead, it has worked over the deacdes if I BTFSpike! I have been buying gold since the 1980s.

I made decision at the start of this year to stop saving, economise for 2 years and buy £1000 of pysical every month. Whether I got 50 Oz at the start of the year or 25 Oz this month I don't care, it's my hedge against the collapse of the currency. I'm buying while I can abd while stocks are available.

If things get really bad then I win because any fiat I have is likely to be a risky asset, likely worth not much but my silver will always be worth a lot or a little and will always be tradeable. Unlike a failed currency.

It's a hedge, you decide what you can afford to do and go buy physical. Whether it's a few grams of gold a month or a few Oz of silver or a monster box, look at the fundamentals and make the decision.

If anyone doesn't understand this, then go fuck yourself, see you in hell.

agreed...problem is how are you going to calculate the value of Au? Relative to some other asset obviously...my calculation compares the price of Au to the $...yours to the value of the ES...however you then must figure (it seems to me) the value of the ES in $...I may be wrong but that seems like two steps instead of one..I don't disagree with you btw and find your figure intriguing to say the least...

btw the comparison to the 1980 high is NOT a projection. It is a backwards looking comparison simple point...Au is NOT as expensive as in 1980...finis

I am experiencing the same long periods between sell at a profit in Silver this afternoon because the people want to buy at lower and lower prices and forcing the sellers to drop prices to sell... the weak ones who need money now.

I am a strong one and can wait a while.

Gold Eagles did not move for about 5 days while the impasse over (Mexican stand off) between the sellers and buyers at the 50 dollar spread. Someone collasped it and suddenly the Eagle bullion spread is half and the buying and selling has resumed for now.

Someone IS buying and more someones is selling.

This is not the time to be getting into paper money. I have that written into my heart. Call me a bull if you want... but be careful until this whole poltical soap opera playes out for the USA one way or the other by AUG 2.

IGNORE THE MEDIA whipping the people into a froth.... That is all noise.

As far as Reid's comment of boner's big wet kiss, I say Reid's bill is a dry hump in the ass.

Having a particular knack at buying precisely the top, I bought some silver near $50 only to get smacked down. However, since I've bought silver at 9, 15, 28, 36...price doesn't matter. Now silver's pushing $41, marching higher.

If you have no gold, you wont like the answer: yes buy some. If you already have a healthy mix, diversify: buy tangable assets such as guns, farm land, etc. Only use the change in your seat cushions to speculate on paper (and that includes paper gold you may buy in a brokerage account).

There will never be a top in gold. That's because money printing, devaluations, currency dilution and proliferation of paper assets like stocks and derivatives will never stop. In fact it's going to accelerate. And with that economic risks multiply. There's too much paper relative to things to buy. So gold will never have a real top. That has stood the test of time

FOFOA, Turk, Embry and Sprott... all employed by the PTB as limited hangout operation operatives targeting students of monetary theory, angled at manipulating their perception and setting them up for the terrible consequence of false wealth preservation.

Fiat is forever. You all underestimate the power of the money creators.

Gold has no intrinsic value outside its shiny color, and it doesn't taste very good.

</sarc>

(Somehow Johnny Bravos cock ended up in my mouth...sorry about that amigos.)

look at the XAU/CHF and CHF/USD - do you see that gold was much higher a few months ago then now (when price in Swisses)? Maybe should buy some gold because you don't wanna be the sucker holding USD when it drops to nil!

My wife recently asked when I was going to stop buying 'coins'... I told her it was a simple exchange of currency (dollars for gold and silver eagles). When she turns around and tells me to buy more, then I'll know the end game is near.

I bought 17 gold maple leafs at $1220 and 100oz of silver bars in early-December of 2009, shortly before gold popped and it languished big-time for many months. This was my first PM purchase and I thought I was an idiot (jury still out, but for other reasons), but I'm pretty glad about not getting panic-y and selling it all to cut my losses. I've since then bought much more silver, (the spot price of which has more than doubled), and the gold's making 25% (or holding steady, while the dollar declines by an inverse amount - take your pick).

Anyways, I'll cash out eventually to finish building my house, which I'm doing entirely myself and with no debt whatsoever. And the car is paid for. So without a mortgage or car payment, hopefully PM's will still be affordable enough that I can convert some of each paycheck into more precious shineys.

I know, crazy isn't it? I can use my "worthless" dollars to buy food, and guns, and ammo, and gas, and silver, and hookers and an eightball. Wait a minute. I guess my dollars aren't worthless after all.

I got both... still have to pay the bills. Booked a holliday to a warm place with palmtrees and caprinhas. Seems like a good plan. LOL

to answer your question: the choice is between running the risk of a 30% loss (though I don't think we'll ever see gold below 1400) or OTOH a 100% loss (hyperinflation). Seeing how the FED keep printing, according to the article here on ZH; it looks like they're actually steering towards a collapse.

I spent the last hour watching very recent videos of cops in the USA beating up people in the street and tasering people to death in diverse cities in the USA. Whatever the reason, that show of brute violence is a show of weakness, not strenght. They look unnerved and agressive. Something's up, I can feel it.

There was an article here maybe amonth back. It talked about how gold longs could be crushed through manipulation of the ten yr. Does anyone have a link, or remember who wrote it? Some good side trades in 10 yr recently. Thx

and yes, Virginia, by Friday I will buy aht the "all time high" of $16xx

I buy every other payday (payday on 15th of the month to pay bills, payday on 1st of month ==> discretionary income). I have been doing so for 4 solid years now, and have some smaller purchases over the years prior to my newer policy of buy every month. Unless/until I have something resembling "confidence" in the dollar again, I will continue to buy every month. Month after month. Regardless of price.

Too bad I keep getting involved in boating accidents and bad poker games. I can't seem to hold on to the stuff. I just keeps getting lost.

Good plan all round - buying what you can afford, not speculating, not overreaching. Pacing it, and looking at gold as your real savings account, not a get rich quick scheme. I'm lousy at judging tops, but doing it your way, all I notice is the annual appreciation :o)

And hey - with a constantly appreciating asset, who really cares about a smallish pullback? It's all just 'noise' on the chart. ('I only made 95% of the possible profit when measured at this random point in time? Noooo! Damn, you, fate!')

I'm starting to believe that ZH'r suffer from a form of historical normalcy bias. In this case, just because Gold has acted as insurance against a fiat system in the past, DOES NOT insure that it will protect against a gov on psycotropic medication this time. Think of all the variations this time around...

When I have funds, I buy. That simple. Been doing so for 3 years, since seeing the light. It's amazing what a little here, and a little there, can accumulate over time.

To me, gold and silver are buys at any price. I have a more philisophical attachment to it than the bullshit in my 401k (that I am stuck in as long as I have this job, or would've cashed it in yesterday).

All the rationalizations are ridiculous. As long as we have negative real rates of interest, gold will climb. Buy the dips and don't sell until the central bank is openly buying from the public for $8,000/oz or $10,000/oz (or whatever it will be at that time).

The fasces, symbol of fascism, is a bundle of rods/sticks around an axe. The fasces was carried in Roman times by heralds to anounce power of travelling magistrates to punish [beating] or kill [axe], at will.

[per James Henry Breasted, founder of University of Chicago's Oriental Institute, established abt 1920 by John D. Rockefeller of Standard Oil's trust umbrella of operations.]

I'm a poor man with a shit job and no prospects despite a professional license and certifications out the wazoo. Long story short, I have enough "stuff" to weather the coming storm, but my PMs amount to a couple handfuls of Morgan Dollars. Sad, I know, but given that I have roughly 5K to play with, where do I go from here?

I can make a case for each of the following:

-Keep it in cash, liquidity is good.

-Put it in silver, I'm poor and it's the poor man's gold

-Get some small denominations of gold, or some combination of this and the above.

I ponder and ponder, but I keep ending up at option 1. Time is running out for me. Well, it's running out for everyone but folks like me are literally on the front lines of this shit. I don't often ask for advice but in this case I'd appreciate some.

Well keep one month's expenses for your household on hand, use about 2 thousand to buy at a low price Silver Bullion Coin ASE or similar. Where you buy at per ounce is your base price.

Establish where you will need to sell at a profit, examine the exhanges availible to you and when your sell order executes, roll the gross minus your fees into buying at a price lower than your base price in ounce. (If you can) and sell at the same profit price point or higher.)

You cannot day trade this sort of thing, you set a price and wait for the sell order to come through when you know you make a profit.

This seems like a good idea but I'm not sure about tying up 2K doing it, especially since my experience trading is...non-existent. Still, you've opened my eyes to another avenue besides my 3 options. Thank you.